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Exercise No. 3

This document contains an exercise on elasticity concepts with multiple choice and problem solving questions. It tests the student's understanding of: 1) Different types of elasticities including price elasticity of demand, income elasticity, and cross price elasticity. 2) Properties of different elasticities like perfect inelasticity, elastic vs inelastic demand, and characteristics of luxury goods. 3) Calculating elasticities using the arc elasticity formula for given changes in price, income, and quantities of different goods. Problems include calculating income elasticity, cross price elasticity, and price elasticity of supply.

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Quenny Ras
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158 views2 pages

Exercise No. 3

This document contains an exercise on elasticity concepts with multiple choice and problem solving questions. It tests the student's understanding of: 1) Different types of elasticities including price elasticity of demand, income elasticity, and cross price elasticity. 2) Properties of different elasticities like perfect inelasticity, elastic vs inelastic demand, and characteristics of luxury goods. 3) Calculating elasticities using the arc elasticity formula for given changes in price, income, and quantities of different goods. Problems include calculating income elasticity, cross price elasticity, and price elasticity of supply.

Uploaded by

Quenny Ras
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Exercise No.

3
ELASTICITY CONCEPT

Name: Quenny Gie C. Ras Score: __________________


Yr/Crs/Sec: 1BSBA-A Date: 03/02/22

TRUE OR FALSE.
Instruction: Write the word TRUE if the given statement is correct and FALSE, if otherwise.
FALSE 1. Price elasticity of demand measures responsiveness of buyers to changes in
prices.
FALSE 2. If the demand for a good is of unitary elasticity, the same amount of money is
spent on it regardless of its price.
TRUE 3. Inelastic price demand elasticity results when the percentage change in quantity
demanded is greater than the percentage change in price.
TRUE 4. The income elasticity measures the response of the consumers to changes in the
income.
TRUE 5. If the cross price elasticity results to a negative sign, the two goods are said to
be complements.
TRUE 6. If the supply is perfectly inelastic, a change in the price has no effect on the
quantity supplied.
FALSE 7. Increasing the price of a commodity with inelastic demand will increase profit.
FALSE 8. Price supply elasticity measures the seller’s reaction to a change in the price of a
product.
TRUE 9. Price demand elasticity for luxury goods tends to be elastic.
TRUE 10. A vertical line represents perfectly inelastic demand.
PROBLEM SOLVING
Instruction: Instruction: Answer the following problems and box your final answer.
1. The income of Mr. FG Garcia increased from Php600 to Php900 a day. His demand for
grocery items increased from 300 to 450. Compute for the income elasticity of demand of
Mr. FG Garcia and identify what kind of good. Using arc elasticity formula.

2. Compute for the cross price elasticity of the following commodities and identify what type
of goods: (using arc elasticity formula).

Commodity Before After

Price/Unit Quantity Price/Unit Quantity

Printer(Y) 5,000 2,000 5,500 1,500

Ink(X) 1,500 1,100 1,500 900

3. Compute for the price elasticity of supply of the following points on the supply schedule.
(using arc elasticity formula).
a. Points A –C c. Points E – F
b. Points C – E d. Points A – F

Points Price Quantity Supplied

A 2 45

B 5 51

C 8 54

D 13 58

21
E 15 60

F 19 63

G 20 70

ANSWER:

22

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